Childers calls for public debate on EU transaction tax proposal

A full public debate on whether Ireland should impose a €500m transaction tax on bankers and derivative trading is essential before the Government rejects the idea, Labour MEP Nessa Childers has said.

She was highly critical of a report on the issue released by the Government this week and on which they say they have based their current policy — which is to reject the tax unless all other countries agree.

Ms Childers said that the report, which was prepared by the ESRI three months ago, was “flawed and outdated”.

The tax is estimated by the European Commission to raise at least €500m a year for Ireland.

Since the report was drawn up, the commission has revised its impact assessment, changing many of the figures taken by the ESRI for its calculations.

The European Parliament has also voted to make important changes to the draft including the “issuance principle”.

Under this, no financial activity would relocate from Ireland as all firms in the world who service the European market would have to pay the tax.

This is expected to be included in the new proposal due from the commission shortly.

As a result, the only way a company could avoid paying this tax was if they abandoned not just locating in Europe, but doing any trades with any exchange in the EU, or dealing in any shares or derivatives having any association with any country in the EU.

It also means that the tax would be collected by whatever country had signed up to the tax proposal for both parties — so in a trade involving Frankfurt and Dublin, Germany would collect the tax due on both sides if Dublin opted out, according to the commission.

Ms Childers questioned why a report, paid for by the public purse and written three months ago, was only released this week.

“Why was it not released for public consumption and debate before now? How could the minister take a stance on the issue at EU meetings without a public debate? We need a full debate on this issue before the commission publishes its follow-up proposal.”

Ireland is among a number of countries blocking the EU-wide tax which would be worth an estimated €57bn a year to the countries.

Finance Minister Michael Noonan has said Ireland will not prevent a number of countries going ahead with it, but it will not join them.

However, he said he could object to it if it would adversely affect the single market, and he warned that it could create a dangerous precedent allowing the EU to interfere with a country’s control over its taxation.

It is seen as part of the move forward towards banking and fiscal union. Germany has said it will move ahead if it gets eight other countries to join in.

Britain has been among the biggest objectors to it while Ireland and Luxembourg has argued that they might lose out with bankers relocating to other jurisdictions.

Ireland, like Britain, imposes stamp duty but only on transactions involving shares that cover mainly the big insurance companies, but the whole derivative market goes free.